The Fugitive Economic Offenders Act, 2018

Economic offences involving very large sums often affect public institutions, banking confidence, and the overall integrity of financial markets. In certain cases, individuals accused of such high-value offences leave India or remain abroad to avoid criminal prosecution. This creates practical difficulties in securing presence before Indian courts and in preventing dissipation of assets connected to the offence.

The Fugitive Economic Offenders Act, 2018 was enacted to deter such conduct and to ensure that a person who evades the Indian legal process does not continue to enjoy benefits from crime. The Act provides a special legal mechanism for declaration of an individual as a fugitive economic offender and for attachment and confiscation of property, including property located abroad.

Short Title, Extent and Commencement of The Fugitive Economic Offenders Act, 2018

• Short title: Fugitive Economic Offenders Act, 2018
• Extent: Whole of India
• Commencement: Deemed to have come into force on 21 April 2018 

Purpose and Legislative Objective of Fugitive Economic Offenders Act

Fugitive Economic Offenders Act is designed to:

1. Deter fugitive economic offenders from evading Indian criminal prosecution by staying outside India.
2. Preserve the rule of law, by ensuring that evasion does not become a strategy to defeat criminal justice.
3. Enable confiscation of proceeds of crime and other properties of such offenders (in India and abroad).
4. Prevent misuse of civil courts by allowing disallowance of civil claims by declared offenders.

Applicability of the Fugitive Economic Offenders Act

Fugitive Economic Offenders Act applies to any individual who is, or becomes, a fugitive economic offender on or after the date of coming into force of the Fugitive Economic Offenders Act.

Key Definitions under Fugitive Economic Offenders Act

Fugitive Economic Offender (FEO)

An individual becomes a “fugitive economic offender” when:

• A warrant for arrest has been issued by an Indian court for a Scheduled Offence, and
• The individual either:
  • has left India to avoid criminal prosecution; or
  • being abroad, refuses to return to India to face criminal prosecution.

Scheduled Offence

A “Scheduled Offence” means an offence listed in the Schedule to the Act, provided the total value involved is ₹100 crore or more. This threshold is central to the Act and restricts its use to serious, high-value cases.

Proceeds of Crime

“Proceeds of crime” includes:

• Any property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence, or its value; and
• If property is held outside India, then equivalent value property held in India or abroad.

Special Court

“Special Court” means a Court of Session designated under the PMLA framework (section 43 of PMLA). The Special Court hears applications and passes orders under this Act.

Contracting State

A “contracting State” is any country/place outside India with which India has arrangements (treaty or otherwise) for cooperation. This enables execution of confiscation orders abroad through formal requests.

Salient Features of the Fugitive Economic Offenders Act

1. Special procedure for declaration of an individual as an FEO.
2. Attachment and confiscation of proceeds of crime and other properties (including benami property).
3. Jurisdiction vested in Special Court for speed and specialisation.
4. Power to issue requests to contracting States for execution of confiscation orders.
5. Disallowance of civil claims of declared offenders and connected entities.
6. Defined burdens of proof and evidentiary standards.
7. Overriding effect over inconsistent laws while continuing alongside other laws.
    

Authorities and Their Powers

Authorities under the Act

Authorities appointed under the Prevention of Money-laundering Act, 2002 are treated as the authorities for this Act as well.

Powers Similar to a Civil Court

For purposes of filing and pursuing an application, the Director or authorised officer has powers akin to a civil court (CPC) for:

• discovery and inspection
• enforcing attendance and examination on oath
• compelling production of records
• receiving evidence on affidavit
• issuing commissions for examination of witnesses/documents
• other prescribed matters
   

Procedure for Declaration of Fugitive Economic Offender 

Application to Special Court (Section 4)

If the Director/authorised officer has reason to believe (recorded in writing) that an individual is an FEO, an application may be filed before the Special Court.

The application must include:

• reasons for belief
• whereabouts information
• list/value of properties believed to be proceeds of crime (including outside India)
• list of other properties/benami properties (India/abroad) sought to be confiscated
• list of persons with interest in those properties 

Attachment of Property (Section 5)

Two routes exist:

(A) Attachment with permission of Special Court for property mentioned in the application.

(B) Provisional attachment before filing the application, if:

• there is reason to believe property is proceeds of crime / owned by the suspected FEO, and
• the property is being dealt with in a manner likely to frustrate confiscation.

If provisional attachment is done, application must be filed within 30 days.

Duration: Attachment continues for 180 days, extendable by the Special Court. Enjoyment of attached immovable property by persons interested is not automatically barred.

Survey, Search and Seizure (Sections 7–9)

• Survey: Entry and inspection powers where belief exists that an individual may be an FEO, with powers to inspect records, verify proceeds of crime, take copies, mark records, prepare inventory, and record statements.
• Search and seizure: Authorised search of buildings/vehicles etc., seizure of records/property, preparation of inventories, examination on oath.
• Search of persons: Includes safeguards such as the option to be taken to a Gazetted Officer/Magistrate, witness presence, list preparation, and female search by female only.

Notice by Special Court (Section 10)

After application filing, notice is issued to:

• the alleged FEO; and
• other persons with interest in property.

Key requirements:

• appearance date must be not less than six weeks from notice issuance
• notice must state consequences: declaration and confiscation on failure to appear
• service can be routed through authority for contracting States
• electronic service modes are recognised in specified circumstances 

Hearing (Section 11)

• If the individual appears in person at the specified time/place, the Special Court may terminate proceedings.
• If the individual does not appear but appears through counsel, the Court may allow one week to file reply.
• If there is no appearance and Court is satisfied about service/best efforts, the Court may proceed. 

Declaration (Section 12)

After hearing, if satisfied, the Special Court may declare the individual as an FEO with reasons recorded in writing.

Confiscation of Property (Core Consequence)

What Can Be Confiscated?

On declaration, the Court may confiscate:

• proceeds of crime in India or abroad (even if not owned by the FEO), and
• any other property or benami property in India or abroad owned by the FEO. 

Nature of Confiscation Order

The order should:

• identify properties that constitute proceeds of crime, or quantify the value if identification is not possible
• separately list other properties in India owned by the FEO to be confiscated 

Effect of Confiscation

All rights and title in confiscated property vest in the Central Government from the date of confiscation, free from encumbrances.

Protection of Bona Fide Third-Party Interests

The Special Court may exempt from confiscation any proceeds of crime in which another person has an interest, if the Court is satisfied that the interest was acquired bona fide and without knowledge that it was proceeds of crime.

Property in Contracting States

If the property is in a contracting State, the Special Court may issue a letter of request to the competent authority abroad for execution of the confiscation order.

Supplementary Application (Section 13)

If further properties are discovered after the main application is filed, a supplementary application may be filed seeking confiscation of such newly identified properties. Sections 4 to 12 apply to such supplementary applications as far as possible.

Disallowance of Civil Claims (Section 14)

This is a strict deterrent provision.

• Once declared an FEO, courts/tribunals in India may disallow the individual from putting forward or defending any civil claim.
• Courts/tribunals may also disallow a company or LLP from putting forward/defending civil claims if a controlling/promoter/majority shareholder/key managerial person involved has been declared an FEO. 

Management and Disposal of Confiscated Properties (Section 15)

The Central Government appoints an Administrator (officer not below Joint Secretary rank) to receive and manage confiscated property. Disposal is restricted for 90 days from the confiscation order.

Rules of Evidence and Burden of Proof (Section 16)

• Burden lies on the Director/authorised person to establish that:
  • the individual is an FEO, and
  • the property is proceeds of crime or other property in which the individual has interest.
• Where a person claims bona fide interest without knowledge, that person bears the burden of proving it.
• Standard of proof: preponderance of probabilities. 

Appeal (Section 17)

• Appeal lies from any judgment/order (not interlocutory) of the Special Court to the High Court on facts and law.
• Limitation: 30 days, extendable for sufficient cause; no appeal after 90 days. 

Bar of Jurisdiction, Protection, and Overriding Effect

Bar of Jurisdiction (Section 18)

Civil courts have no jurisdiction over matters that the Special Court can determine under the Act. Injunctions are barred against actions taken under the Fugitive Economic Offenders Act.

Protection for Good Faith Actions (Section 19)

No suit/prosecution lies against Government, Special Court officers, Director/Deputy Director/authorised officers for actions done in good faith under the Act.

Power to Amend Schedule (Section 20)

The Central Government may add/omit offences in the Schedule by notification, and such notification must be laid before Parliament.

Overriding Effect (Section 21) and Other Laws (Section 22)

The Fugitive Economic Offenders Act overrides inconsistent laws, but operates in addition to other laws and not in derogation of them.

The Schedule: Broad Coverage of Offences

The Schedule includes offences under multiple laws, such as:

• Indian Penal Code provisions on cheating, forgery, counterfeiting, conspiracy etc.
• Negotiable Instruments Act (dishonour of cheque)
• Customs Act, Central Excise Act
• Benami Property law
• Prevention of Corruption Act
• SEBI Act offences
• PMLA offences
• Companies Act fraud-related offences
• Black Money Act
• Insolvency and Bankruptcy Code offences
• CGST Act offences

A critical point is that only those scheduled offences with value involved of ₹100 crore or more trigger the Act’s mechanism.

Conclusion

The Fugitive Economic Offenders Act, 2018 creates a specialised legal route to deal with individuals accused of high-value scheduled economic offences who evade Indian criminal jurisdiction by staying abroad. Its strongest tools are attachment and confiscation of proceeds of crime and other properties, the ability to seek execution in contracting States, and the possibility of disallowing civil claims after declaration. 

The Fugitive Economic Offenders Act also includes procedural safeguards through notice, hearing, and appellate oversight. Overall, it is a targeted law intended to strengthen enforcement against large-scale economic offences and protect the integrity of the Indian legal system.